Investors Committing to US-Focused Private Real Estate Funds – September 2013

by Charles James

  • 04 Sep 2013
  • RE

Preqin currently tracks 1,122 investors that have previously committed to private real estate funds that focus on the US. In terms of geographic location, the majority (90%) of these investors are based in the US. West Europe is the next most significant location with 4% investing from this region, while 2% are based in Australasia and the remaining 6% are made up of regions including Nordic, Far East and the Middle East.

When considering investors with an appetite for the US by institution type, public pension funds represent the highest proportion, with 29% of all investors being of this institution type. Foundations account for 22% and private sector pension funds make up 21% of those known to have invested in US-focused funds. Endowment plans and insurance companies are the next biggest components, constituting 10% and 7% - respectively.

Investors based in North America represent a significant source of capital for the real estate industry as a whole. The aggregate total assets of the 1,024 North America-based investors that are known by Preqin to have invested in US-focused funds is approximately $15.3tn and the average current allocation to real estate is 6.4% of total assets. The average target allocation is 7.2% of total assets.

In terms of strategy preference of the investors that have previously committed to US-focused private real estate funds, value added strategies are the most popular with US-based investors, as 67% expressed this as a preference. Fifty-six percent noted opportunistic strategies as a preference, followed by core (51%), debt (39%) and core-plus (31%). For investors based in West Europe, the lower risk core strategy is a preference of 77% of investors but the higher risk opportunistic (76%) and value added (71%) strategies also have a significant representation. Fund of funds are favoured by 16% of US-based investors compared to 8% of West Europe-based investors.

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